Abstract : This paper presents the design and analysis of a methodology for detecting and isolating multiple sensor faults in large-scale interconnected nonlinear systems. The backbone of the proposed decentralized methodology is the design of a local sensor fault diagnosis agent dedicated to each interconnected subsystem, without the need to communicate with neighboring agents. Each local sensor fault diagnosis agent is responsible for detecting and isolating multiple faults in the local set of sensors. The local sensor fault diagnosis agent consists of a bank of modules that monitor smaller groups of sensors in the corresponding local sensor set. The detection of faults in each of the sensor groups is conducted using robust analytical redundancy relations, formulated by structured residuals and adaptive thresholds. The multiple sensor fault isolation in each local sensor fault diagnosis agent is realized by aggregating the decisions of the modules and applying a diagnostic reasoningbased decision logic. The performance of the proposed diagnostic scheme is analyzed with respect to sensor fault detectability and multiple sensor fault isolability. A simulation example of two interconnected robot manipulators is used to illustrate the application of the multiple sensor fault detection and isolation methodology.